Demonstration comes on heels of Senate hearing on tax 'scams'

Donning blue windbreakers with “Tyranny Response Team” printed on the back, a group of tax critics will march around the Internal Revenue Service building tomorrow in Washington, D.C., in an effort to draw attention to their cause.

The “walkaround” starts at 9 a.m. when protesters gather at the Jefferson Memorial. An hour later, the march begins under what promise to be clear skies and warm temperatures. The purpose of the march is to draw attention to what is commonly known as the “tax protester movement,” or the “tax honesty movement.” Members of the loosely organized group desire to “educate Americans” about what they claim is the fraudulent ratification of the 16th Amendment, which ushered in the federal income tax.

The march is organized by the We The People Foundation — the group whose full-page USA Today ad was featured at a Thursday meeting of the Senate Finance Committee. Intended to “educate taxpayers about tax fraud scams before the April 15 tax filing deadline,” the hearing provided a forum for senators to “explore ways to improve the federal government’s policing of Internet-based tax schemes, scams and cons,” according to the committee’s description of the hearing’s scope.

As part of that education and exploration, the committee had on hand a poster-sized version of an ad run several times in USA Today by We The People. The ad outlines various arguments made by activists who believe the Internal Revenue Code does not require most Americans to pay income taxes or to have the taxes withheld from their paychecks. And regardless of the tax code, the 16th Amendment was fraudulently ratified, they say, so Congress has no power to tax citizens’ incomes.

WTP Chairman Bob Schulz was at the hearing.

“Here’s how it looks to us — a lot of people are becoming informed and educated about things like the 16th Amendment and the ratification process,” he said. “People are learning that there are serious questions that go to the authority of the IRS to collect individual income taxes. At the same time, those people are seeing the government evade these issues.”

As a result of that evasion, “more and more people, we said (at a WTP press conference outside the hearing room), are becoming convinced that there must be something to these arguments.” They’re deciding there’s something wrong with the tax system, he continued, and so they’re “not paying because they’re of the opinion that they don’t have to.”

Because of the growing number of “educated” non-filers — who get their information largely from Internet-based organizations — and participants in tax-evasion schemes, the government is not collecting approximately $300 billion that should be paid by individuals and employers, said committee members. Testimony and questioning Wednesday dealt with the possibility of shutting down websites that promote tax fraud.

“Tax scams are as old as the tax code. The Internet is giving them new life,” said committee chairman Sen. Chuck Grassley, R-Iowa, after the hearing. “The American people should be aware of the snake oil these hucksters are selling. They’re putting old poison in a new bottle. The con artists get rich, and innocent people are left holding the bag.”

A witness from the Federal Trade Commission said, “A colorful, well-designed website imparts a sleek, new veneer to an otherwise stale fraud; and the reach of the Internet allows an old-time con artist to think — and act — globally, as well.”

Witnesses described numerous tax-evasion techniques, including so-called tax-exempt trusts and business structures; off-shore accounts, banks, businesses and trusts; “dropping out” of the tax system by stopping payment; and charity-like or religious entities established for personal tax avoidance.

Prominent tax-revolt leader Bill Conklin, who wrote the book, “Why No One is Required to File Tax Returns,” set up such an organization in 1977. Called the Church of World Peace, the former high-school teacher and Denver resident wrote in his book that he created the church “to promote my religious beliefs and take advantage of the tax laws relative to churches. I also started exercising my First Amendment protected right by telling others about my beliefs and sharing with them the concepts for setting up their own church.” Conklin’s “church” had its tax-exempt status revoked in 1995.

Grassley said he was disturbed by the proliferation of Internet-based or augmented tax scams and urged the IRS to take a more active role in policing them. He said he looked forward to working with IRS Commissioner Charles Rossotti to improve enforcement in this area, particularly in terms of actively seeking tax scams on the Internet, rather than waiting until scams have “snared victims.”

“The IRS should emulate the Federal Trade Commission’s ‘rapid response team’ that locates scam artists and targets them for enforcement action within days,” Grassley said. In addition, the chairman said he will work with the IRS to ensure that it has the necessary tools to focus its enforcement resources on con artists instead of lawful taxpayers.

“The IRS is well-intentioned on this point, but the agency is operating under old rules and old procedures put in place before the Internet,” said Grassley. “It’s important for the agency to investigate scams more quickly and shut them down before they harm innocent people. The IRS collects taxes, but it also has to protect taxpayers.”

Schulz believes there’s only one effective way to promote compliance with tax laws among those who believe the IRS illegally collects income taxes.

“The best thing they can do if they really want to get people to pay their taxes is to deal with these real, serious questions that go to their authority to collect the tax,” he said, adding that New York Times reporter David Cay Johnston agrees with him.

Johnston has written several pieces about the tax-revolt movement, including a report on the growing number of employers who refuse to withhold taxes from employee paychecks — a group he referred to as “tax cheats.” WTP subsequently labeled Johnston an “IRS cheerleader” and has held the reporter up as an enemy of the “tax honesty movement.” That relationship has begun to change, however, since Johnston acknowledged the IRS’ responsibility to address tax critic’s arguments.

“I do not believe that Mr. Schulz’s arguments have merit. But significant is the Internal Revenue Service’s policy to not clearly and in plain English explain to people who are in the thrall of such arguments the specific reason that they are not valid,” Johnston told WorldNetDaily, adding that WTP’s “IRS cheerleader” reference to him is “indicative of the quality of their arguments.”

Coming on the heels of the hearing is the “walkaround” protest. Organizers are hoping for at least 1,040 participants — the number of the tax-return form filed by most Americans. March officials say 1,400 people are needed to fully encircle the IRS building with protest marchers.